Remarks by Angel Gurría
4 July 2019 - Poznan, Poland
(As prepared for delivery)
Dear Ministers, Ladies and Gentlemen,
It is an honour to open the 2019 Western Balkans Summit. This annual Summit is a key milestone in our efforts to increase the well-being of citizens and build a brighter future for the region. This year is a particularly important one, with the 30th anniversary of the democratic transformations in Central Europe and 15th anniversary of European Enlargement.
And what a better place to discuss these prospects than in Poland? Our host is a great example of the many benefits that multilateral cooperation can bring to in economic and social transitions.
After numerous reforms in early 1990s, Poland became an OECD member in 1996, and member of the European Union in 2004. Both occasions helped bolster reforms and well-being throughout the transition processes. And indeed they have produced tangible results. Living standards have increased significantly for all and the economy is also more dynamic. Our latest OECD Economic Outlook projects that Poland’s economy will grow at a rate twice as high as the OECD average by 2020.
At the OECD we believe that the Western Balkans must follow suit, and we see many opportunities ahead for sustainable and inclusive growth in the region.
This is in part because the economies of the region have done the groundwork. Over the past two decades, they have led reforms to develop their economies and facilitate their integration into the global economy. As a result, they have doubled the size of their GDP, increased foreign direct investment (FDI) inflows more than tenfold, and export volumes sixfold. Despite being hit by the global financial crisis in 2008, they have consolidated their public finances and improved their business environments. Moreover, the perspective of EU enlargement has been a powerful incentive and the Berlin Process has further strengthened economic cooperation with and within the region.
To consolidate and build on these achievements the region must focus on strengthening the drivers of growth, which reflect our policy recommendations. Let me stress four major aspects:
First, a functioning labour market and a strong labour force is crucial. Unemployment in the Western Balkans remains high, at over 20% , and the share of young people not in employment, education or training is almost double EU and OECD averages. Reaching gender equality in the labour market is also an urging necessity: women represent 60% of all inactive workers in the Western Balkans, and only 40% of employed personnel. High-qualified workers are the first to leave the region for better employment opportunities abroad, which has resulted in a large mismatch between worker skills and the needs of the private sector, hindering labour sustainability in the long run, as the demand for skilled workers is bound to rise.
Second, the region must create a favourable investment environment for all types of companies and businesses. Although simplified administrative procedures and reduced costs have improved the business climate in the Western Balkans, weak enforcement of laws and regulations and high informality are hindering entrepreneurship. SMEs in particular face difficulties when it comes to accessing finance and participating in supply chains. As a consequence, innovation and technological outcomes are limited in the Western Balkans, and domestic firms struggle to meet international quality standards. The OECD SME Policy Index for the Western Balkans and Turkey and the OECD SME and Entrepreneurship Outlook provide key insights on how to empower the next generation of entrepreneurs to boost competitiveness and employment.
Third, the region needs well-developed digital, transport and energy infrastructure. Access to the digital economy is growing along with broadband coverage, but the potential to deepen the digital transformation remains significant. Bridging the digital divide between major cities and provinces means also reducing regional inequality across the region, guaranteeing equal access to the digital world to enterprises and citizens, no matter their location. Investment in transport can help enhance connectivity with EU markets as well as within the region, but such investments must be aligned with long-term goals. In addition, energy efficiency is improving, but environmental challenges persist as carbon emissions remain superior to the levels indicated by the Paris Agreement. The report, OECD Competitiveness in South East Europe: A Policy Outlook is a rich resource on how to make economies of the region more interconnected, resilient and prosperous.
Last, the region needs more trade and more investment. A precondition for this is openness to FDI and low trade barriers. At the same time, the region requires targeted FDI in strategic export oriented, growth-enhancing areas, such as automotive, machinery, agro-food and metal processing sectors. This would accelerate the transition towards higher added value production and would reduce the gap between the income levels of the Western Balkans and other OECD and EU countries.
Ladies and Gentlemen,
The Western Balkans represent a historically important region. It is crucial for Europe’s stability and prosperity. We need to strengthen integration with the European Union and with the world economy. An integration that creates opportunities for the people, an integration that strengthens regional cohesion in the Balkans, an integration driven by inclusive and sustainable growth.
The OECD is ready to help the region overcome its structural challenges and advance in such a process. Rest assured that we stand ready to work with you towards stability and shared prosperity, through better policies for better lives.
I invite you all to join me later on at the Poland-OECD Conference, where I will be launching the OECD’s latest publication on the region: Global South East Europe: Unleashing the Transformation Potential for Growth in the Western Balkans, which identifies opportunities to scale up and converge with the growth levels of more advanced economies. Thank you.